Funding Growth by Acquisition in a Distressed Economy
In the coming months, new prospects for bankruptcy acquisitions are predicted to increase substantially—and CFOs are taking notice.
The economy is in distress. Higher interest rates, inflation, and supply chain concerns are the primary contributors, according to experts. As a consequence, bankruptcies are on the rise. In fact, by the end of the first quarter, there have been 13,550 bankruptcies forecast in the United States; by the end of 2023, around 21,000 companies may be affected. It goes without saying that pressure is rising for many.
In the face of hardship, unique opportunities can present themselves.
Bankruptcy acquisition has several upsides (and a few downsides). One advantage for the buyer is that there will be no liens on any assets from the company they acquired; thus, creditors can’t attempt to collect any debts on those assets left unfulfilled by the previous owner. One possible disadvantage for the buyer is that, sometimes, companies undergoing bankruptcy may be sold via auction. When this happens, the price of the business can be driven up, making acquiring the company more costly.
The bankruptcy process can move quickly. It’s complex and there are a lot of moving pieces and different parties involved. A buyer looking to secure assets from this process will need to be on the ball, adaptable, and observant in making sure the acquisition plays out appropriately.1
ThermoCredit may be able to help. We’re a funding company that gives our clients an alternative to banks and venture capital. And what’s more? Generally speaking, we work faster than these alternatives as well, which is a bonus given the often expedient nature of bankruptcy acquisitions.
We’ve loaned over $1 billion to hundreds of tech companies over the last 20 years. The ready capital we’ve provided to our clients has helped fund acquisitions, recapitalization, payroll, debt management, and so much more.
If you’re a CFO who wants to grow your company through acquisition opportunities in the current economy, and you’re looking for financial options to fund your endeavors, ThermoCredit might just be the right choice for your business.
Did you know that ThermoCredit provides far more than funding to our clients?
ThermoCredit has been the lender of choice to the communications and technology industries for the last 20 years.
In that time, ThermoCredit has provided more than $1,000,000,000 in financing to fund expansions, acquisitions, capital projects, payroll, and meet the needs of our clients. Our services include:
Business Planning—Our team is led by financial professionals and managed by Seth Block CPA. This means when you need funding, but are unsure of how much capital you need or how to arrive at your goal, our team is at the ready to help you plan every step of the way.
Acquisition Consulting-- Whether your company is in the market to acquire or be acquired, the ThermoCredit team can assist with valuations and help find the suitor or target to best meet your needs. Our financial network is comprised of a variety of funding sources that can meet any need.
Recapitalization Strategy—As the leader of your company, you are aware of how unique your company is and the goals you have laid out for it. The challenge can be how to realize those goals while managing existing debt. ThermoCredit can bring a variety of solutions and partners to the table to help you accomplish your goals. A solid strategy is a key to success.
SBA Assistance – ThermoCredit can help you secure a federal loan and we can work with the SBA administration, which enables asset-based and SBA loans to work together. This means you have greater access to the funds you need. This option is ideal for small companies with giant aspirations, but limited financial resources to fund those dreams.
It’s not about where you’ve been, but where you’re going.
With ThermoCredit as your financial provider, you can rest assured
the right finance option is available without having to sacrifice equity.
Scale-up, diversify, and plan for tomorrow.
Powell Says Fed Will Consider More-Aggressive Interest-Rate Increases to Reduce Inflation. How will this affect your business?
In March 2022 the Federal Reserve System voted to increase interest rates by 0.25%, the first interest rate increase since 2018. Fed officials have indicated multiple increases will occur in the near future.
Businesses considering expansion and acquisitions in the months ahead may opt to take advantage of current rates as a hedge against higher interest rates. With the .25% increase at hand and more increases coming, your financial leadership may feel a sense of urgency to act or they might determine interest rates are not as important as one might think.
Here is what business owners need to know before seeking out funding in an environment with interest rates on the rise:
Understand what your near and long-term business goals are, determine what your interest rate options are, and the potential upside from your business plan. If your upside recognizes a significant financial gain, then interest rates are likely not an issue for you. If your situation is more time-sensitive, apply for your loan sooner rather than later.
Since the pandemic began, the Fed has kept interest rates extremely low. Now inflation rates are on the rise, prompting the government to raise interest rates and keep the economy in relative balance. While rates have already increased by 0.25%, they are still relatively low. Timing matters. If your near-term goals include funding and interest rates are a concern, now is a good time to start talking to potential lenders.
Focus on your business plan and make modifications to adjust for interest rate increases. If your plans are rate sensitive, find a lender who can work with you to meet the needs of your goals. Finding the right lender and loan types to meet your needs can lessen the impact of interest rate hikes.
Increased rates will make qualifying for traditional bank loans more difficult, especially for young businesses and companies that are hard to finance, so alternative lending solutions may be better options. ThermoCredit considers your business in total and your growth plans, so they can bring solutions to the table that make sense. It’s your business roadmap and with ThermoCredit, you can get the funding you need while retaining control of your company.